2015 Completed matters

The following consultation matters have either been completed or actioned through other processes.

Matters that were outside the scope of our consultation processes as determined by our consultation principles were actioned through other processes including discussions with relevant staff and highlighting our existing information and guidance processes.

We also directly provided information, and referred to the public or private ruling programs.

[201578] Employee Share Schemes

The ATO has developed standard ESS documents to help companies develop and maintain their Employee Share Schemes.

In particular, the documentation relates to:

ESS Share plans

ESS Employee handbook

ESS Employer handbook

These documents will add to the existing suite of standard ESS documents that were released in July 2015.

Description

As part of the government’s efforts to reform ESS, the ATO was asked to work with industry to develop streamlined approaches to setup and maintain ESS.

The ATO has developed a suite of standard documents that have been well received by industry and based on this feedback; the ATO has now developed draft versions of more standard documents.

Comments were invited on these documents and have now been incorporated into the documents.

Who we consulted

We have consulted with a wide variety of industry participants including professional bodies, industry experts, tax agents, start-up companies, companies that already have an ESS and software providers/developers.

Outcome

Feedback on the standard documents has been received from industry and incorporated.

The proposed changes under this initiative will give the Commissioner the discretion to determine the required method of sending and receiving information and payments to and from the ATO provided the service is available and reliable.

What this means is that we will require most people to use our digital services to send and receive information and payments to and from the ATO. This would likely be the same way you may currently use private sector services.

We consulted on the Digital by Default initiative from 30 November 2015 to 29 January 2016. The consultation received significant interest with 1,003 responses overall.

The findings were documented in a final report released 19 February 2016. The feedback is still being considered and will inform the Digital by Default approach and legislation. Further consultation will occur on the approach and legislation. Please continue to monitor our Let’s TalkExternal Link page in 2016 for updates on consultation for the Digital by Default initiative.

This matter was actioned through other processes and the submitter referred to our private ruling process as it was considered not to be suitable for the ATO's public guidance process.

[201573] Responsibility of business to comply with ATO requirements

Outcome

This matter was actioned through other processes and the submitter referred to existing information.

[201572] Extended transition period for the new Practitioner Lodgment Service

Purpose

Seek feedback from relevant stakeholders on our proposal to extend the transition period for the shift from ELS to the new Practitioner Lodgment Service.

Description

The consultation paper outlined the ATO’s intention to maintain the Electronic Lodgment Service (ELS) until 31 March 2017 to ensure tax practitioners have continued access to a reliable electronic lodgment service during Tax Time 2016.

[201571] ATO enquiries of third parties

This matter was actioned through other processes and the submitter contacted and provided with an explanation and referred to existing information.

[201570] Accounting interpretation

Outcome

This matter was actioned through other processes the submitter contacted and an explanation provided.

[201569] Proposed public ruling – The deductibility of legal expenses under section 8-1 of the Income Tax Assessment Act 1997

Purpose

To consolidate the current ATO view of products on the deductibility of legal expenses into a single principle based public ruling and improve taxpayer certainty.

To undertake consultation with stakeholders to ascertain their views on:

whether a ruling (and any other alternative product) should cover any additional circumstances

potential consequential impacts from amalgamating these ATOIDs and TDs

potential consequential impacts on other ATO views that may need to be considered

the usefulness and accuracy of the current ATOIDs and TDs on legal expenses

from a practical point of view, what factors make it difficult to apportion costs between deductible and non-deductible legal expenses?

Description

The following list of issues is in the process of being considered:

the general application of section 8-1 of the ITAA 1997 in respect of legal expenses – including practical guidance on applying the provision in this context

the general principles that are relevant in determining whether legal expenses are deductible under section 8-1 of the ITAA 1997:

the nexus between the legal expenses and the operation or activities by which the taxpayer gains or produces assessable income or the carrying on of the taxpayer’s business for the purpose of gaining or producing assessable income

the character of legal expenses

matters that do not affect the deductibility of legal expenses

whether the legal expenses relate to the gaining or producing of exempt or non-assessable non-exempt income

whether a provision denies a deduction for the legal expenses

whether a specific deduction in available for the legal expenses under another provision of the Income Tax Acts

apportionment.

Who we consulted

Profession bodies, including representatives of tax and accounting profession associations and industry bodies.

Outcome

Changes have been drafted that incorporate feedback received during the consultation and initial feedback from the Panel. The draft Ruling is currently being further considered by the Rulings Panel.

what is their position on the proposed OECD CRS XML and web application reporting solutions?

Description

In September 2014, the Government announced that the CRS would be implemented in Australia. It will commence on 1 July 2017 and the first exchange of information will take place in 2018.

The CRS is the single global standard for the collection, reporting and exchange of financial account information on non-residents. Under it, a reporting financial institution applies the CRS due diligence rules to identify eligible financial accounts held by residents of other jurisdictions and then reports required information to their local tax authority. This information is then sent to the non-residents’ tax authority.

Financial institutions required to report under the CRS include banks and other deposit taking institutions, custodial institutions, investment entities, and specified insurance companies.

Who we consulted

Financial institutions required to report under the CRS, with industry associations, and with software providers and potential intermediaries.

Financial institutions are banks, building societies and credit unions, life insurance companies that offer insurance products that include an investment component, private equity funds, managed funds, exchange traded funds and brokers that hold financial assets for the account of others.

Outcome

The ATO has consulted with a range of financial institutions, software developers, intermediaries and industry associations to develop the details for domestic CRS reporting in Australia.

We have now confirmed with the OECD that Australia has finalised its CRS domestic reporting arrangements as outlined in this paper. The OECD portal has been updated to reflect the completion of this implementation milestone.

[201566] FBT and remote area accommodation

This matter was actioned through other processes and the submitter was contacted and an explanation provided.

[201565] Review of ATO advice and guidance on earn-out arrangements

Outcome

This matter was actioned through other processes and the submitter was contacted and an explanation provided.

[201564]The sharing economy

Purpose

To allow the ATO to provide certainty to the community on the tax implications of the sharing economy.

Description

The sharing economy, or collaborative consumption, is a rapidly growing and emerging part of the broader economy. Generally, it involves a facilitator bringing together suppliers and consumers via an internet or smart phone platform. Services that are provided include accommodation, tasking services and ride sourcing.

Who we consulted

Detailed consultation was undertaken with a major platform provider and professional advisors.

We also provided opportunity for other stakeholders, including state and territory representatives nominated through our established consultative channel to comment on the guidance document to ensure it was relevant and to ensure our communication would be effective.

Outcomes

The value of the need to provide certainty to the community on any taxation implications was recognised. We consulted with industry to understand how the main emerging business models operated to assist us to appreciate the commercial arrangements, to assist us to examine the law and its application and then to work with related stakeholders to apply the law.

To consider whether the Commissioner should extend WTI 2008/1, which is currently restricted to card products specifically issued for business use, to include the following:

creditable business transactions recorded on all card products, including those issued to individuals for personal use such as personal credit card statements and debit card transactions on bank statements

creditable business transactions made by sole trader or partners using their personal cards, or employees or agents of the entity using personal cards.

Who we consulted

GST Advisory Group and the Australian Bankers’ Association, Business sector

Outcome

We are analysing the comments and feedback provided as part of the review of WTI 2008/1.

[201562] Employee obligations

A simple scenario depicting an audit case focussed on employer obligations was presented to the members. The current letters sent and the draft letters being developed for this type of audit were discussed.

Who we consulted

ATO Tax Practitioner Advisory Group

Outcomes

Feedback from the consultation included:

90% of their clients do not know what to do in an audit. There is an opportunity to help and educate clients through the audit process.

the letter notifying the audit should disclose more information about the reason for the audit to help speed up the audit and help the employer understand what they need to do

notifying the agent at the same time as the employer is notified of the audit might help the agent prepare for the audit and to get all the records together

re-wording the expected timeframe of the audit and review the tone of one of the letters.

We are analysing and applying the comments and feedback from the focus group in the review process.

[201561] Natural resource income

Purpose

To develop an appropriate guidance product in consultation with industry.

Description

Develop practical guidance to assist stakeholders in determining whether a payment to a non-resident falls within the meaning of natural resource income pursuant to section 6CA of the Income Tax Assessment Act 1936 and whether they are obliged to withhold an amount under section 12-325 of Schedule 1 to the Taxation Administration Act 1953. We also intend that the guidance consider the interaction of these provisions with Australia’s tax treaties.

Who we consulted

Tax practitioners, industry representatives and tax and accounting professional associations through the Energy and Resources Working Group.

Outcomes

We received a number of items of feedback which were supportive of the proposed guidance.

We are currently considering the most appropriate interpretive product in which to develop the guidance.

[201560] Segregated pension assets

Purpose

To provide clarity on whether an SMSF trustee needs an actuarial certificate to exempt income from segregated current pension assets in the first year those assets are supporting a prescribed pension that does not commence on 1 July.

Description

Earlier in 2015, the ATO made statements at a number of external engagements confirming the ATO view as contained in paragraph 42 of TD 2014/7 that SMSFs which do not start a prescribed pension on 1 July need an actuarial certificate to claim exempt current pension income using the segregation method in the first year the fund converts to pension phase.

Numerous external enquiries were received questioning the ATO view. Submissions were subsequently received from key actuarial representatives detailing an alternative view and confirming that the ATO view was contrary to general industry practice dating as far back as 2004.

Who we consulted

SMSF actuarial industry and SMSF professionals.

Outcomes

A special purpose meeting was held on 11 August 2015 which discussed the history in formulating the ATO view stated in paragraph 42 of TD 2014/7.

The alternative view proposed by industry was discussed and the ATO confirmed that following an internal review of the ATO’s position an alternative argument was considered reasonable and acceptable to the Commissioner.

An addendum to TD 2014/7 amending the relevant paragraph will issue to provide certainty on the issue.

[201559] PAYG variation and lodgment

Outcome

This matter was actioned through other processes and contacted the submitter and provided an explanation.

[201558] Effective tax borne (ETB)

Purpose

The first phase of the project involved a “test run” of the ETB methodology for six taxpayers, and facilitated the trialling and testing of several templates, including, an ETB request for information and ETB workbook.

Consultation will also be conducted with external intermediaries to further refine the ETB methodology and process.

Description

An ETB model was produced by the ATO and provided to the Senate Economics Reference Committee (Committee) as part of the Inquiry into Corporate Tax Avoidance. The materials provided to the Committee consisted of an ETB formula and explanatory notes to assist in understanding and applying the formula.

The ETB methodology provides a basis for a standardised approach to understanding total worldwide profit from Australian linked business activities, and Australian and offshore tax paid on that profit and, in turn, to create a consistent methodology for understanding, at a high level, the tax performance of individual taxpayers. The ETB model was released by the ATO to encourage broader discussion about the need for, and appropriateness of, a standardised approach to calculating ETB.

Who we consulted

Corporate Tax Association, Australian Accounting Standards Board, other industry associations, accounting and legal professionals, companies selected for the pilot and other interested or nominated taxpayers

Outcomes

An ETB Pilot Evaluation Workshop was held on 12 November 2015. The Workshop involved ETB pilot participants, and key professional bodies, together with senior Tax Office representatives.

At the Workshop we:

considered key findings from the pilot;

discussed feedback we received from pilot participants (and through consultation)

discussed proposed changes to the original ETB methodology

consulted on the draft recommendations.

This was a valuable opportunity to obtain feedback on each of these items. We are now incorporating the feedback received at the workshop into our pilot evaluation and will be using the workshop as an opportunity to inform and shape the recommendations before they are finalised.

[201557] Marketing Hubs – practical guide

Purpose

To develop a practical framework to help taxpayers self-assess their risk of transfer pricing compliance activity in relation to offshore marketing hubs.

Description

The ATO is developing a guide that will include both qualitative and quantitative indicators aimed at helping taxpayers assess their compliance risk associated with related party marketing hub arrangements and mitigate their risk and understand what compliance activity may occur.

Who we consulted

Minerals Council of Australia, Australian Petroleum and Exploration Association and representatives of the industry group or association as well as professional associations or groups, intermediaries or academia.

Outcome

The feedback received during the consultation process has helped to develop a timeline for the release of a practical compliance guide.

[201556] Effective life review of robotic milking machines as part of the dairy cattle farming industry

Purpose

To determine the effective life of robotic milking machines used in the dairy cattle farming industry.

Description

The Commissioner may make determinations of the effective life of depreciating assets under section 40-100 of the Income Tax Assessment Act 1997.

The effective lives determinations will be used to update and expand the effective life schedule attached to Taxation Ruling TR 2015/2.

Who we consulted

Various businesses and companies that operate robotic milking machines used in the dairy cattle farming industry.

Outcomes

The ATO reviewed the effective life of robotic milking machines used in the dairy cattle farming industry and consulted with appropriate industry participants between July 2015 and March 2016.

The draft effective lives determinations were referred to an independent review panel held in April 2016. The review panel checks the review process and to confirm that the level of industry consultation was appropriate. The recommendations were approved, and the effective life determinations will apply to assets purchased on or after 1 July 2016.

[201555] Effective life review of assets used in Table B of the Commissioner’s schedule

Purpose

To determine the effective life of assets in Table B of the Commissioner’s schedule.

Description

The Commissioner may make determinations of the effective life of depreciating assets under section 40-100 of the Income Tax Assessment Act 1997.

The effective lives determinations will be used to update and expand the effective life schedule attached to Taxation Ruling TR 2015/2.

Who we consulted

Various businesses and companies that use or manufacture the relevant assets in Table B of the Commissioner’s schedule and Industry associations and users of the assets.

Outcomes

The ATO reviewed the effective life of certain assets in Table B of the Commissioner’s schedule and consulted with appropriate industry participants between July 2015 and March 2016.

The draft effective lives determinations were referred to an independent review panel held in April 2016. The review panel checks the review process and to confirm that the level of industry consultation was appropriate. The recommendations were approved, and the effective life determinations will apply to assets purchased on or after 1 July 2016.

[201554] Effective life review of assets in Table A of the Commissioner’s schedule

Purpose

To determine the effective life of assets in Table A of the Commissioner’s schedule.

Description

The Commissioner may make determinations of the effective life of depreciating assets under section 40-100 of the Income Tax Assessment Act 1997.

The effective lives determinations will be used to update and expand the effective life schedule attached to Taxation Ruling TR 2015/2.

Who we consulted

Various businesses and companies that use or manufacture the relevant assets in Table A of the Commissioner’s schedule.

Outcomes

The ATO reviewed the effective life of certain assets in Table A of the Commissioner’s schedule and consulted with appropriate industry participants between July 2015 and March 2016.

As part of this review we finalised new determinations for:

bee farming plant

cigarette and tobacco manufacturing

ice making

confectionary manufacturing

The draft effective lives determinations were referred to an independent review panel held in April 2016. The review panel checks the review process and to confirm that the level of industry consultation was appropriate. The recommendations were approved, and the effective life determinations will apply to assets purchased on or after 1 July 2016.

[201553] Effective life review of assets used in the parking services industry

Purpose

To determine the effective life of assets used in the parking services industry.

Description

The Commissioner may make determinations of the effective life of depreciating assets under section 40-100 of the Income Tax Assessment Act 1997.

The effective lives determinations will be used to update and expand the effective life schedule attached to Taxation Ruling TR 2015/2.

Who we consulted

Various businesses and companies that operate in the parking services industry.

Outcomes

The ATO reviewed the effective life of assets used in the parking services industry and consulted with appropriate industry participants between July 2015 and December 2015.

The draft effective lives determinations were referred to an independent review panel held in April 2016. The review panel checks the review process and to confirm that the level of industry consultation was appropriate. The recommendations were approved, and the effective life determinations will apply to assets purchased on or after 1 July 2016.

[201552] Enhanced third party reporting, pre-filling and data matching

Purpose

To further engage with impacted stakeholders and provide them with an opportunity to raise any issues or concerns with respect to their reporting obligations.

Description

Under the legislation there are four reporting regimes being introduced with corresponding Legislative Instruments, Explanatory Statements and Electronic Reporting Specifications for consideration:

transfers of real property – the start date for reporting is 1 July 2016 with the first quarterly report due for submission by 31 October 2016.

government grants and payments – the start date for collection of data is 1 July 2017 with the first report due to be lodged by 28 August 2018.

business transactions made through payment systems – reporters will need to commence collecting the required data from 1 July 2017 with the first annual report due for submission by 31 July 2018.

transfers of reportable securities and units in a unit trust – the start date for reporting is 1 July 2016 for ASIC. Managed Funds and Trustees reporting through the Annual Investment Income Report will need to report by 31 October 2018. All other reporters will need to commence collecting the required data from 1 July 2017 with the first annual report due for submission by 31 July 2018.

A number of formal submissions were received and discussions were held. The feedback has been considered with changes made to the legislative instruments, reporting specifications and supporting material. Responses to submissions were distributed clarifying the considerations made.

[201551] Effective life review of computing assets

The Commissioner may make determinations of the effective life of depreciating assets under section 40-100 of the Income Tax Assessment Act 1997.

The effective lives determinations will be used to update and expand the effective life schedule attached to Taxation Ruling TR 2015/2.

Who we consulted

Various businesses and companies that use computing assets.

Outcomes

The ATO reviewed the effective life of computing assets and consulted with appropriate industry participants between July 2015 and March 2016.

The draft effective lives determinations were referred to an independent review panel held in April 2016. The review panel checks the review process and to confirm that the level of industry consultation was appropriate. The recommendations were approved, and the effective life determinations will apply to assets purchased on or after 1 July 2016.

[201550] Effective life review of assets used in the cured meat and smallgoods manufacturing industry

Purpose

To determine the effective life of assets used in the cured meat and smallgoods manufacturing industry.

Description

The Commissioner may make determinations of the effective life of depreciating assets under section 40-100 of the Income Tax Assessment Act 1997.

The effective lives determinations will be used to update and expand the effective life schedule attached to Taxation Ruling TR 2015/2.

Who we consulted

Various businesses and companies that operate in the cured meat and smallgoods manufacturing industry.

Outcome

The ATO reviewed the effective life of assets used in the cured meat and smallgoods manufacturing industry and consulted with appropriate industry participants between July 2015 and March 2016.

The draft effective lives determinations were referred to an independent review panel held in April 2016. The review panel checks the review process and to confirm that the level of industry consultation was appropriate. The recommendations were approved, and the effective life determinations will apply to assets purchased on or after 1 July 2016.

[201549] Effective life review of assets used in the dairy product manufacturing industry

Purpose

To determine the effective life of assets used in the dairy product manufacturing industry.

Description

The Commissioner may make determinations of the effective life of depreciating assets under section 40-100 of the Income Tax Assessment Act 1997.

The effective lives determinations will be used to update and expand the effective life schedule attached to Taxation Ruling TR 2015/2.

Who we consulted

Various businesses and companies that operate in the dairy product manufacturing industry.

Outcomes

The ATO reviewed the effective life of assets used in the dairy product manufacturing industry (milk and cream) and consulted with appropriate industry participants between July 2015 and March 2016.

The draft effective lives determinations were referred to an independent review panel held in April 2016. The review panel checks the review process and to confirm that the level of industry consultation was appropriate. The recommendations were approved, and the effective life determinations will apply to assets purchased on or after 1 July 2016.

[201548] Record keeping requirements for foreign general insurers

To determine if Legislative Instrument ID F2006L01985 and the exemption under subsection 820-960(4) of the ITAA 1997 is still required and whether it should be remade with or without amendments.

Description

Section 820-960 of the ITAA 1997 requires entities to keep certain records for Australian permanent establishments in respect of the thin capitalisation rules under Division 820 of the ITAA 1997.

Legislative Instrument ID F2006L01985 relates to the record keeping requirements for foreign general insurers carrying on business in Australia through a permanent establishment. This legislative instrument was made on 22 May 2006 and provides that foreign general insurers authorised to operate in Australia by the Australian Prudential Regulation Authority (APRA) need not comply with the accounting standards for the purpose of subsection 820-960(1A) from the year of income commencing on or after 1 July 2002.

Who we consulted

Insurance Council of Australia, Financial Services Accountants Association, APRA and APRA registered foreign general insurers with a branch in Australia.

Outcome

Legislative Instrument ID F2006L01985 lapsed and ceased to have effect from 1 October 2016. It will not be remade.

[201547] Foreign investment reforms

To obtain feedback on the ATO's administration of the Foreign Investment reforms, support communications and develop training resources.

Description

The Foreign investment reforms announced on 2 May 2015 include:

the transition of Foreign Investment Review Board (FIRB) compliance functions for residential real estate from Treasury to the ATO

application fees and screening for all property purchase proposals by foreign investors to stream through ATO systems from 1 December 2015, with the ATO taking responsibility for the approval of residential real estate applications. Approval of Agricultural and Commercial property purchases will remain with Treasury

increased transparency on the levels of foreign ownership in Australia through a comprehensive land register. There will be increased scrutiny around foreign investment in agriculture with the introduction of an Agricultural land register from 1 July 2015 and a residential land register from 1 July 2016

stricter penalties to make it easier to pursue foreign investors who breach the rules. A reduced penalty period (2 May – 30 November 2015) will apply for those who voluntarily disclose subject to exceptions.

Chartered Accountants Australia and New Zealand, The Tax Institute, Property Council of Australia, Institute of Conveyancers, Corporate Tax Association, CPA Australia, Institute of Public Accountants, Law Council of Australia, Australian Bankers Association, Treasury, Real Estate Institute of Australia.

Outcomes

The ATO has agreed to continue the meetings on a quarterly basis, until 30 June 2017 to coincide with the implementation of the Water Access Entitlements register – a last minute requirement of the legislative package underpinning the reforms that received Royal Assent in November 2015. Law for the Water Access Entitlements register must be in place before 1 December 2016 to prevent the sunset of the Register of Foreign Ownership of Agricultural Land Act 2015 and the associated register administered by the ATO.

Given the public interest in this topic area the continuation of a meeting of this stakeholder group will enable a direct information flow through to key intermediaries, provide transparency for key industry groups and improves intelligence gathering within the ATO for this important program of work.

[201546] Foreign currency hedging transactions

to determine how the principles of offer and acceptance apply to foreign currency hedging transactions, the subject of TR 2014/7;

explore whether there are fact patterns which are common;

identify the information available to the various participants;

explore the viability of an administrative approach to determine the source of the gain from such transactions for the purposes of Division 770 of the ITAA 1997.

Description

The ATO is seeking detail on how the foreign currency hedging transaction are carried out including what the terms of the transaction are and where those terms are found (in what documents, implied through practice). We are also seeking to establish how the detail of the transaction is captured and what information is available to each participant.

Who we consulted

Australian Financial Markets Association, Australian Superannuation Funds Association, Financial Services Council and the Australian Custodial Services Association.

Outcome

An addendum to TR 2014/7 was published 16 March 2016 re-inserting the Commissioner’s view on source based on common law principles into the Ruling.

PCG 2016/6 has been published setting out a reasonable basis for determining source in respect of transactions the subject of TR 2014/7.

[201545] Lease-in Lease-out (LILO) arrangements

Purpose

To develop a shared understanding with external stakeholders around the industry and commercial drivers of vessel leasing structuring, and to work towards developing a consistent approach to permanent establishment attribution and the application of the transfer pricing provisions to these arrangements, including addressing any differences of view in tax characteristics.

[201544] Single Touch Payroll

After listening to feedback, the Small Business Minister issued a media releaseExternal Link on 10 June 2015 asking for further consultation to be conducted on the following proposal going forward:

real time compulsory reporting of PAYGW and Super Guarantee information to the ATO at the time of the payroll event for each employee

voluntary real time payment of PAYGW and Super Guarantee as an option

running pilots with small business from July 2016 to test various scenarios, including simplifying the process of bringing on new employees with streamlined TFN declarations and Super Choice forms, and the timing for implementation.

Description

In late 2014, the Government announced that it would reduce red tape for employers by simplifying tax and superannuation reporting obligations through Single Touch Payroll (STP).

Since then, the ATO and Treasury have been consulting broadly with businesses of all sizes, tax professionals, key industry groups and software developers to understand the impacts Single Touch Payroll will have on the community.

Single Touch Payroll is an initiative that uses the payroll event to fulfil employer reporting obligations. The first phase will deal with Pay As You Go Withholding Tax (PAYGW) and superannuation contributions. Subsequent phases could expand scope to include the fulfilment of additional reporting obligations to other government agencies and intermediaries.

Businesses would complete their payroll and simultaneously fulfil the following reporting and payment obligations:

paying staff electronically

providing an electronic pay slip to staff

reporting PAYGW tax electronically

reporting superannuation electronically

paying PAYGW tax electronically (optional).

Implementing the Single Touch Payroll proposal would require employers (or their payroll provider) to use Standard Business Reporting (SBR) enabled business management software.

Single Touch Payroll will also have an impact on tax professionals – both BAS and tax agents – who deal with business clients.

We have consulted with a broad section of the community as part of the Single Touch Payroll proposal between June 2014 and July 2015. We have engaged 237 members of the community across a variety of audience groups.

[201542] Regulations for integrated petroleum operations

Purpose

To develop recommendations aimed at improving the operation of certain aspects of the regulations that will be considered as part of the remake.

Description

The ATO is consulting with the petroleum industry on the Petroleum Resource Rent Tax Assessment Regulations 2005 (regulations) that will ‘sunset’ on 1 April 2016. The regulations provide a framework to determine a price for sales gas in the case of an integrated petroleum operation.

The ATO is seeking industry’s input into the proposals identified in the discussion paper and will consider other proposals as part of the consultation process. Industry is providing further information to assist the ATO’s consideration of these proposals.

Who we consulted

Industry members through the Australian Petroleum Production and Exploration Association (APPEA). There will be further consultation with representatives on the Energy and Resources working group once views are more fully developed.

Outcomes

In July 2015, the ATO received feedback from industry members on the discussion paper provided in May 2015 that identified a number of areas where the operation of the regulations can be improved to make them clearer, more certain and assist in their application and administration.

The ATO has passed this feedback on to Treasury who have commenced the process of remaking the regulations.

[201541] On-line support for financial planners

Present concepts to confirm the usefulness online resources for financial planners and whether there are any additional parts need to be considered.

Description

Two concepts are being co-designed to assist financial planners find and access information on the ATO website.

‘Life events and financial decisions' bring together relevant tax and superannuation information to support the financial advisor when their client experiences certain life events that lead them to seek financial advice.

‘e-guide’ for financial planners groups together information on the ATO website in one place for financial planners, under various meaningful headings. This resource will be regularly updated with the latest relevant taxation rulings, media and video releases, social media updates, taxpayer alerts, tips on good governance and current tax risks and schemes.

These concepts are being designed to present their content in an easier to understand form that will aid industry consultation feedback.

Two concepts specifically for financial planners have been presented for consultation by the industry.

Feedback from financial planner associations and members surveyed during September indicates both concepts would be useful to assist them in their business. Whilst not many responses were received they were all supportive of the approach.

As these concepts are considered useful by the financial planning industry, the ATO will develop material for our website.

To consult on the design for ‘certainty letters’ that will be issued to low risk individual taxpayers.

Description

From September 2015, the ATO will pilot issuing certainty letters to 500,000 individual taxpayers. The letter is to acknowledge and provide certainty to taxpayers who meet their obligations and do the right thing with their tax. It confirms that their 2015 income tax return is finalised and will not be subject to any further review or audit.

The certainty letter will be tailored towards low-risk taxpayers with simple straight-forward affairs. We will explore how this process limits unnecessary reverse work flow for tax practitioners.

Who we consulted

Interested members of the ATO Tax Practitioner Advisory Group, Individual Taxpayer Liaison Group and National Seniors or their nominees.

Outcomes

The certainty letter has been completed and distributed to tax payers. We have not received any feedback on the letter since it issued to recipients.

[201537] Review of private advice

Purpose

Seek input to help shape a future vision for private advice, to develop a revised advice framework that meets community expectations and to identify new ideas for us to explore.

Description

In line with our program of Reinventing the ATO, we are looking to improve our advice services, both public and private. We have concluded the review of public ATO advice and guidance and we recently sought your input into how we can reshape our private advice system to better meet expectations across all client groups.

Who we consulted

We consulted broadly across a range of interested stakeholders including clients, professional bodies, industry representatives, tax agents and others.

Outcomes

Feedback from the Review of private advice told us you want a private advice system that provides:

[201536] GST adjustments and windfall gains

Purpose

To seek feedback from the community, including tax professionals, on the ATO’s preliminary view on the issue of whether Division 142 of the GST Act (about restrictions on GST refunds) can apply in circumstances involving GST adjustments.

Description

Where a supplier overpays GST to the ATO (for example, because they incorrectly treated something they supplied to a customer as being subject to GST), Division 142 generally prevents the supplier from obtaining a refund of the overpaid GST until they have reimbursed the customer for any GST that has been passed on to that customer. This ensures that the supplier does not get a windfall gain where the cost of the GST has been borne by the customer.

On its terms, the provision clearly applies where GST has been overpaid in relation to supplies.

However, the question has arisen as to whether the same rules apply where GST has been overpaid as a result of a GST adjustment, that is, where later events change the amount of GST or input tax credits for a supply or acquisition after the fact.

Who we consulted

The GST Advisory Group, tax professionals from the Let’s Talk subscriber list, and other interested parties.

Outcomes

There was broad agreement, from those who provided comments, with the ATO’s preliminary view. A draft GST determination will be prepared to formally set out our views, allowing further opportunity to provide feedback.

[201535] Improving the preparation and lodgment of small business income tax returns

Purpose

To consult with taxpayers and their representatives on how the initiatives to improve the tax return preparation and lodgement experience for business tax returns could affect them and allow open consultation by both parties to ensure the aims of the initiatives meet the needs of all stakeholders.

Description

A number of proposals were raised at a meeting of the ATO Tax Practitioner Advisory Group (ATPAG) earlier this year. The group decided that a special purpose group should be established to consider these proposals in more detail. These proposals are aimed at improving the tax return preparation and lodgment experience for businesses. They include:

assisted compliance messages to help businesses during their return preparation and reduce post-issue compliance activity (reviews and audits)

simplifying annual income tax reporting for individuals with business income

integrated tools, such as a personal services income tool that can be saved on ATO systems, with outcomes imported into individual tax returns or completed during return preparation.

The working group will focus on these proposals but may include others as they arise.

Who we consulted

Members of the ATPAG, tax practitioners, software developers, small business representatives – members of the Small Business Consultation Panel, small business industry bodies, and other profession bodies

Outcomes

The group held its final meeting on 10 May 2016 (via telephone conference) with six attendees from small business and representative associations attending.

Five priorities and their progress were discussed:

more help for small business is being delivered through the ‘Show me how’ program

an online depreciation tool is under development by the Capital Allowances working group and will be ready for release for Tax Time 2016

interactive business software is a longer term goal that is being worked towards by industry and the ATO

visibility of ATO data is continuing as a Reinvention priority

access to benchmark data included a discussion on how the current benchmarks are created and how they are used, and identified possible improvements to make them of greater use for small business and their advisers. Further exploration is needed and the group recommends a new working group be formed to focus on benchmarks.

The group has now closed and a report was presented to the ATPAG on 20 May 2016.

[201534] Guidance update – interpretation of ‘in Australia’

Purpose

To provide greater clarity of the ATO view of the meaning of ‘in Australia’ in Divisions 30 and 50 of the Income Tax Assessment Act 1997 and provide input to a public ruling or other guidance products covering the meaning of ‘in Australia’.

Description

The ATO has decided to update advice and guidance products that touch on the interpretation of ‘in Australia’ in Divisions 30 and 50 of the Income Tax Assessment Act 1997. This is in response to ongoing uncertainty in relation to a legislative response to this issue.

Who we consulted

Not-for-profit Advisory Group

Outcomes

The ATO will commence the process to draft a ruling as the general consensus was that on the issue of ‘in Australia’, the community wants the certainty that a ruling provides.

Members of the working group will be engaged during the drafting of the proposed ‘in Australia’ ruling.

The ATO will update the online guidance on ‘in Australia’ early in 2016.

Consultation revealed that the ATO:

needs to be clear that the requirements for 'in Australia' have not changed as there is some confusion in the community.

position on ‘in Australia’ does not need to change however, clearer guidance is needed, including more examples of borderline cases as well as positive examples of circumstances that would be accepted as ‘in Australia’.

needs to provide some practical examples about the differences between Divisions 30 and 50 of the ITAA 1997 in relation to ‘in Australia’.

advice and guidance needs to be updated quickly to reflect judicial decisions as they happen.

[201533] Review of TOFA disclosure requirements in the income tax returns

Purpose

To communicate the reasons for TOFA tax return labels in income tax returns and identify which tax return labels may be removed without affecting the Commissioner’s ability to comply with his obligations under the tax system.

Description

The ATO is aware that certain TOFA tax labels in the company, trust, partnership, SMSF and fund tax returns may place a compliance burden on taxpayers.

To determine whether these compliance costs could be minimised, the TOFA tax labels were reviewed against the information necessary for the Commissioner to fulfil his obligations under the pay as you go instalment (PAYGI) system.

The consultation is to communicate our findings of whether and which TOFA tax labels can be removed and to seek comments.

Recommendations are expected to be implemented from the 2017 income tax return onwards.

Who we consulted

Professional firms, including large accounting firms, and middle market specialist firms; Chartered Accountants Australia and New Zealand, CPA Australia, Australian Bankers Association, Australian Financial Markets Associations, Financial Services Council and tax professionals as needed.

Outcomes

We have provided Treasury with an update on the TOFA tax return label changes that will be made. Treasury will update stakeholders as part of the ongoing TOFA review.

Contact

David Truong, Law Interpretation Officer, Public Groups and Internationaltofa@ato.gov.au telephone: 03 9285 1510

[201532] Small business CGT asset valuation project

Purpose

Gauge from small business taxpayers their knowledge of SB CGT concession and to understand the likelihood of them calculating the concession if they needed to satisfy the MNAV test

Seek efficiencies the ATO can develop or implement that may reduce costs when valuing assets that form part of the MNAV test.

Description

The Inspector-General of Taxation (IGT) recommended that the ATO:

continue consultation with stakeholders to develop and implement, where possible, administrative safe harbours that may reduce compliance costs associated with valuation; and

develop and make publicly available a tool that provides an indication as to the eligibility of a taxpayer for the small business CGT concessions through the maximum net asset value test.

IGT is of the view that ATO could incorporate aspects of the SBIT business line’s risk assessment tool, which estimates the likelihood of taxpayers breaching the $6 million maximum net asset value (MNAV) threshold, into a publicly available tool on the web. Taxpayers using this tool could input the required financial information and be provided with an indication of the likelihood of exceeding the threshold. This indication may save some taxpayers the need to conduct costly market valuations where they may be clearly eligible or ineligible.

Who we consulted

Tax practitioners, small business consultation panel members and software developers

Outcomes

Consultation took place with stakeholders to seek their views on a tool that provides an indication as to the eligibility of a taxpayer for the small business CGT concessions through the maximum net asset value test. The findings were documented in a final report due 31 July 2015. Feedback is still being considered and updates will be provided in the next phase.

[201531] Public ancillary fund guidance

To review ATO public ancillary fund guidance for amending trust deeds to comply with the Public ancillary fund guidelines.

Description

This consultation followed an issue raised by a member of the Not-for-profit Advisory Group at its 25 March 2015 meeting.

The external member suggested some changes to ATO guidance for public ancillary funds leading up to the 1 July 2015 deadline for funds to make changes to their trust deeds to give effect to the current Public ancillary fund guidelines.

The proposal was intended to provide trustees with greater certainty and to avoid the imposition of unnecessary additional cost to comply with the guidelines by 1 July 2015.

Who we consulted

Not-for-profit Advisory Group

Outcomes

The ATO has agreed to issue public ancillary fund guidance on ato.gov to set out the conditions under which a trustee resolution adopting required public ancillary fund. Guidelines in lieu of an amendment to the trust deed will be accepted.

seek input and advice about risks, issues, blockers to the use of the report

identify support required by tax agents in the use of the report (any additional information requirements, definitions, technological requirements)

identify reverse workflow issues or increased costs of compliance

socialise the transparency concept with end-users of one of the key product deliverables

engage tax agents with the report.

Description

During February and March 2015 we consulted with a range of tax agents all of whom had private groups and wealth individual clients. Individual, face-to-face, scripted conversations occurred in Melbourne and Sydney to seek their views on the Income tax risk report and the broader concept of transparency.

Who we consulted

Tax agents who have private groups and wealthy individual clients.

Outcomes

Transparency and ITRR concepts were received favourably by tax agents. Development of the ITRR (and complimentary risk report products) will continue.

Recommendations regarding the following issues will be implemented in relation to the ITRR:

[201529] Domestic travel allowance expenses

Purpose

To assist the ATO determine reasonable expenditure amounts in specific occupations so an appropriate safe harbour (that is, the threshold when a deduction claimed will not routinely be reviewed) can be set. Consultation will be undertaken with each occupation/industry separately.

Description

The Commissioner publishes a tax determination annually (see TD 2016/13 for the 2016–17 income year) that provides reasonable rates for the travel allowance expense substantiation thresholds. The rates apply broadly and for some occupations may provide anomalous outcomes. The reasonable allowance system provides an exemption from substantiation where expenses are below these thresholds, however, the expense still needs to be incurred. The rate is also not the amount that an employer should be paying their employee.

The ATO has noted a disparity between allowances paid and claims made for meals, incidentals and accommodation in some circumstances, particularly in certain industries (examples include long-distance truck driving, construction and performing arts). This has increased the incidence of checking of these claims by the ATO and led to difficulties for employees in showing that the amount claimed was incurred.

The consultation will help the ATO improve confidence in the reasonable allowance expense amount system rules for some occupations by establishing appropriate ‘safe harbour’ amounts with simple rules for employees to follow.

Who we are consulting

Employer and union representatives from the affected occupations/industries and members of the professional tax and accounting bodies.

Outcome

We are considering the feedback received and expect to update our advice and guidance products in the coming months. Any change of view will be prospective.

[201528] Fuel tax credits – improving the client experience

To identify opportunities to simplify and automate the operation of the fuel tax credit system by gaining a better understanding of the natural systems that businesses use to claim fuel tax credits.

Description

The ATO is currently reviewing its administration of the fuel tax credit system and seeking input from stakeholders based on the following questions:

do you feel the fuel tax system is working well overall?

what are the main irritants in the current fuel tax credit system, or the ATO’s administration of it?

are there any specific changes stakeholders would like the ATO to consider, or areas which they think could be improved or simplified?

by way of contrast, are there features of the current fuel tax credit system that stakeholders are happy with and would want to remain unchanged?

We would also like to gain a better understanding of how businesses operate in practice in relation to their fuel acquisition and use, and calculating their fuel tax credit claims.

The ATO is exploring whether there are particular areas where safe harbours (and/or related mechanisms) for the fuel tax credit system could be provided without undermining the integrity of the tax system to:

give certainty to taxpayers and the ATO

reduce compliance costs for taxpayers

ease the administrative burden for the ATO.

We are interested in stakeholder views on whether safe harbour(s) could be appropriately applied to achieve quantifiable red tape reductions.

Stakeholders interested in providing input into the review should email the contact officer.

A summary of the key themes emerging from the consultation was presented to the petroleum and fuel schemes stakeholder groups on 20–21 May 2015. Initiatives to address key irritants and identified areas for improvement are being considered under the ATO’s reinvention program.

[201527] Communication of key messages to BAS agents

This matter was actioned through other processes. The ATO contacted submitter and explained purpose of activity.

[201526] Software compliance for SuperStream

Outcome

This matter was actioned through other processes. The ATO provided information and guidance.

[201525] Changes for the new tax system for managed investment trusts

Purpose

Consultation for the proposed MIT regime will cover three primary areas:

systems and forms – consultation to receive input from affected stakeholders into the changes required to forms and systems as a result of the proposed legislation for the new tax system for managed investment trusts

legislative instruments – to ensure the MIT regime can operate efficiently and that relevant excluded withholding tax characters are known to MITs

guidance products – to consider areas of the law for which MITs require guidance in order to ensure they are able to understand and comply with the proposed new law.

Description

The proposed new tax system for managed investment trusts is one of several policies intended to improve the international attractiveness of Australia’s managed funds industry.

The MIT Bill proposes a new taxing regime specifically for MITs with related reporting requirements. The ATO commenced design and consultation with industry in late 2014 prior to public exposure of the legislation in order to ensure an administrative solution could be in place for both the ATO and MITs for the regime start date.

This consultation aims to ensure that the systems and forms design:

meet the requirements of the MIT Bill

take into account the existing natural systems of the MIT industry, intermediaries and the ATO

is a pragmatic solution for all.

Changes were required to the Annual Investment Income Reporting requirements and a new taxation return form for eligible MITs was proposed. The Bill also requires a new form (AMMA statement) for reporting by the trustee to beneficiaries, which will be developed between the ATO and MIT industry using an existing annual process.

The introduced MIT Bill allows the Commissioner to develop a legislative instrument to specify certain income character amounts that are excluded from the fund payment meaning for AMIT withholding purposes. Industry stakeholders were to be consulted on the contents of these character amounts to minimise the compliance burden for the MITs. However this legislative instrument is considered unnecessary at this stage.

The ATO has developed guidance products in the form of Draft Law Companion Guidelines for the new MIT regime. In doing so, we sought industry views on what areas of the law and types of guidance they may need, We then sought input into the content of these guidance products as they developed.

The EDbD service delivery model is one where the default manner of interacting with the ATO (exchange of information and payments) is digital and opting out of these services is conditional.

Under this model, taxpayers with the functionality and capability to interact digitally will be required to do so. Those who are unable to transition to digital services will be exempted and alternative services made available to them. However, in applicable circumstances, ongoing assistance and support will be provided to eventually transition taxpayers to online and other digital services.

EDbD will also have an impact on tax professionals – both BAS and tax agents – and other intermediaries, for example, insolvency practitioners.

Who we consulted

Large and medium businesses, and tax and BAS agents.

Outcomes

The results have been collated and the feedback received is being used to inform future decisions regarding EDbD.

Further consultation activities are currently being determined following the review of these results.

Businesses and registered agents were broadly supportive of EDbD as they are already dealing digitally for many aspects of their business.

Those interviewed felt for a successful transition they would require:

Timely and accessible support from the ATO, particularly in the early stages of transitioning to digital interactions.

Clear communication about the change, detailing what processes and interactions are changing, how the transition will work, and how to implement the change, as well as the reasons behind the change and the expected benefits for taxpayers.

Advance notice of the change and sufficient time (6–12 months) to transition all of their interactions to digital without penalty.

Secure interactions and more streamlined authentication processes to build confidence in the system.

Availability and reliability of ATO systems to cope with the increased volume and demand.

[201523] Inability to claim imputation credits for deceased estate (trust) with a loss

Outcome

This matter was actioned through other processes. Matter was registered on the former Tax Issues Entry System

[201522] Services and support map

Purpose

To better understand how tax professionals use some of our current service and support information and products to make improvements that match their business needs

To seek input into what further information and products could assist tax professionals in their day-to-day work.

Description

We conducted six face-to-face consultation sessions with tax agents and BAS agents in Adelaide, Penrith and Newcastle.

We aimed to gain an understanding of tax professionals’ awareness of the services and support we provide and how we could further improve the information available about our service offering, in order to assist them in their day-to-day work.

Who we consulted

31 tax agents and 23 BAS agents

Outcomes

The information obtained from the consultation with tax agents and BAS agents will assist us to create new or redesign existing services and support information on our web site to better assist them in their day-to-day work.

[201521] Reinventing the ATO – development and release of the blueprint

Purpose

The blueprint provides a clear line of sight to what we want to achieve as we reinvent the ATO.

Description

We have designed the blueprint with our clients, staff and stakeholders over the past 12 months.

It reflects the kind of experience the community and our staff want to have when they participate in the tax and super systems. A critical component of our reinvention involves engaging with our community and stakeholders to shape, consult, co-design and validate the emerging design. We have asked how we can do things better, what sort of things they want to see in the future and how things are changing for them.

From our consultation and co-design activities we have identified the key needs for the future client experience. We will continue to check back with our community and stakeholders through regular consultation to ensure we are remaining contemporary and to help achieve our vision of being a contemporary, service orientated organisation a reality.

The blueprint continues to be shaped through ongoing consultation and co-design with our community, stakeholders and ATO staff.

Two workshops were held in May 2015 with a specific focus on small business and individuals from non-English speaking backgrounds. The focusing questions were:

Have we got it right – are there things we haven't included that are important?

What can we do to help your community transition to the new digital services?

Planning is underway for a series of future experiences workshops to be held through August to October 2015 with a range of segments to provide more detail on our approach to deliver the future experience described in the Reinvention blue print.

These workshops will help us to develop more detailed designs under the six strategic programs of change.

[201520] Tax obligations of barristers

Purpose

To understand how barristers conduct their practice and identify their tax obligations. This information will be used to produce a resource to assist barristers in managing their practice to meet their tax obligations.

Description

Review and Dispute Resolution periodically holds round table discussions with members of the legal profession. During the December 2014 discussion the possibility of producing specific tax information for barristers was raised.

Who we consulted

The Victorian Bar Association, the NSW Bar Association, the Bar Association of Queensland, the Tasmanian Bar, the South Australian Bar Association, the Western Australian Bar Association, the Northern Territory Bar Association, and the Law Council of Australia.

Outcomes

A guidance publication, Tax tips for barristers 2015, has been produced and disseminated to the Bar Associations for the use of their members. It will either be published on our website or its associated legal database.

[201519] Petroleum resource rent tax – Deductible expenditure

To provide practical guidance on the application of section 38 of the PRRTAA (the general deduction provision) and its interaction with section 44 of the PRRTAA (the excluded expenditure provision).

Description

The ATO is consulting with the petroleum industry on the scope and operation of the general deduction provision under the Petroleum Resource Rent Tax Assessment Act 1987 (PRRTAA) and its interaction with a related provision which excludes certain expenditure from deductibility.

Who we consulted

Industry members through the Australian Petroleum Production and Exploration Association (APPEA). There will be further consultation with tax bodies represented on the Energy and Resources stakeholder group once views are more fully developed.

Outcomes

The ATO will be publishing two Practical Compliance Guidelines and will be aiming to publish these guidelines in time for taxpayers to rely on them when they lodge their 2016 PRRT returns.

[201518] Taking on an employee: making decisions and reducing red tape

Purpose

To assist small business by developing the information and tools required to assist in making the decision to take on an employee including developing a consolidated ‘journey map’.

Description

The project team will explore the issues affecting decision making when taking on an employee by:

focusing on reducing the time it takes to make the decision

improving the accuracy of employee regulation related decisions and consequently reducing costs to business

considering longer term improvements that would aim to harmonise the definition of employee across Australia.

Who we consulted

Small business owners, Fair Work Ombudsman, Department of Immigration, Department of Industry and Science, QLD and NSW Work Cover, QLD Portable Long Service Leave authority, QLD Department of Tourism, Major events, Small Business and Commonwealth Games, Australian Small Business Commissioner and NSW Small Business Commissioner, an academic and QLD Chamber of Commerce.

Outcomes

Recommendations were accepted by the Steering Committee on 16 June 2015 and work is underway to progress recommendations.

[201517] Restructuring from a sole trader to small proprietary limited company

Purpose

This consultation seeks to identify issues when restructuring from a sole trader to a small proprietary limited company including:

education services/products to help business

understand what each structure means in terms of set up and operating costs

make the best decision from start-up, to avoid the red tape and cost involved in changing when the business is operating

opportunities to streamline government regulation when a structure is out grown (for example, can we manage this as a change rather than a ‘new’ registration; is there room to move in the legislation?).

Description

The Small Business Fix-it Squad is a new concept, using a rapid design methodology. Squad members (made up of federal, state and local government employees, small business operators and intermediaries) are immersed in a business to government problem with a goal to find solutions within a short time frame.

Who we consulted

Australian Securities and Investments Commission, Australian Small Business Commissioner, Brisbane City Council, Department of Industry, Queensland State Government Department of Tourism, Major Events, Small Business and the Commonwealth Games, WorkCover Queensland, Queensland Office of State Revenue, Queensland Chamber of Commerce and Industry, Law Council of Australia, Department of Treasury, Council of Small Business of Australia (COSBOA) and a range of small business operators.

Outcomes

The squad found business owners:

do not understand the impact of the change and can be unprepared for increased regulation and compliance requirements

(80% of business owners) would use an agent or accountant with some jumping ahead and registering before seeking advice

do not understand their director duties and exposure to personal debt and penalties or detect and address risks to the business until it becomes a real event.

The squad made seven recommendations – three focus on new products or services and four focus on improvements to existing products/services.

A group consisting of ATO, ASIC and Department of Industry has been initiated to progress two recommendations and leverage common resources required to implement these recommendations.

[201516] Fix it Squad – Selling or closing a business

Purpose

To identify difficulties small business face when selling or closing a business and how we can reduce red tape.

Description

The Small Business Fix-it Squad is a new concept, using a rapid design methodology. Squad members (made up of federal, state and local government employees, small business operators and intermediaries) are immersed in a business to government problem with a goal to find solutions within a short time frame.

This consultation sought to improve business to government interactions (B2G) for small business when selling or closing a business.

Who we consulted

Australian Securities and Investments Commission, Australian Small Business Commissioner, Brisbane City Council, Department of Industry, Queensland State Government Department of Tourism, Major Events, Small Business and the Commonwealth Games, WorkCover Queensland, Queensland Office of State Revenue, Queensland Chamber of Commerce and Industry, Law Council of Australia, Department of Treasury, Council of Small Business Australia (COSBOA), a range of small business operators.

Outcomes

The Small Business Fix-it Squad pilot was successful.

Two recommendations implemented in the first two months were:

improvements to the business name transfer process completed by Australian Securities and Investments Commission

[201513] Safe harbours – Tax and accounting

To identify and achieve red tape reductions in the area of tax and accounting.

Description

Explore various proposals put forward in the working group’s discussion paper on safe harbours (discussion paper) with the view to developing safe harbours that align tax treatment with commercial realities and provide appropriate risk mitigation.

Explore the capacity to simplify tax treatment in this area beyond the issues canvassed in the discussion paper. This includes the areas of timing differences between accounting, the tax requirements related to foreign exchange exposures and the capacity for tax requirements to rely on accounting rules when dealing with valuation issues.

Who we consulted

Representatives from profession bodies and business including members from the Chartered Accountants Australia and New Zealand, large accounting firms and Australia Post.

Outcomes

The co-chairs agreed to that the working group should close.

Whilst the group received external feedback on specific alignment and red tape reduction opportunities it acknowledged that the Board of Taxation (BoT) was taking responsibility and it thought that there were still opportunities that could be explored.

The group will share with the BoT any insights and the work done to date.

Evaluation of the take up rate and effectiveness of the first tranche of safe harbour options has commenced. Any potential modifications to the simplification measures will be subject to future consultation processes.

[201510] Safe harbours – Small and medium enterprises

To identify potential ‘safe harbours’ that might be implemented to increase certainty, reduce compliance costs and red tape in the SME market segment.

Description

A small and medium enterprises (SME) Safe harbour working group has been established to reduce red tape and compliance costs for our clients while being at an acceptable risk and cost to the revenue.

A key initial focus for the working group includes exploring and building upon the various proposals that are currently being pursued in response to the Board of Taxation ReportExternal Link on tax impediments facing small businesses.

The group will also explore capacity to simplify tax treatment in this area beyond the issues canvassed in The Board of Taxation report, with the view to developing safe harbours that align tax treatment with commercial realities and provide appropriate risk mitigation, including with respect to low level legal or in-house software development.

Two safe harbours have been released:

Taxation Ruling 2015/3 provides a safe harbour approach which allows individual lot owners to return the assessable income and claim deductions in relation to common properties of strata schemes, notwithstanding that this outcome depends on the different states and territories strata legislation.

Class Ruling 2016/19 provides a safe harbour solution, for the difficulties faced by 50,000 participants following the collapse of a number of managed investment schemes, in establishing the amount and timing of income to return and reducing the associated costs with amending prior year returns.

[201509] Safe harbours – GST

To identify and achieve red tape reductions in GST through the following means:

exploring the various proposals put forward in the working group’s discussion paper on safe harbours, with the view to developing safe harbours that provide appropriate risk mitigation

identifying and exploring the viability of other safe harbours within GST that are not covered in the discussion paper

considering the application for safe harbours for announced but not enacted New Measures.

Description

Members of the group will be involved in:

positively influencing the functioning of the GST system by contributing to the identification and implementation of red tape reductions

facilitating constructive input from industry and the broader community on any potential areas for red tape reduction

communicating all findings of the working group, including any blockers, to the SHSC for consideration in a timely and constructive manner

progressing action items decided upon at meetings.

Who we consulted

Profession bodies, industry representatives and key tax agents along with others as required during the course of the work.

Outcomes

The practical compliance guide for countertrade transactions has been finalised and is proceeding to publication. A communication strategy will accompany its publication to raise awareness for clients broadly and ATO staff.

[201507] ATO think camp – reimagining compliance

Purpose

An opportunity for breakthrough thinking and re-imagining the way the ATO manages its compliance program. It also provided insights that will increase the effectiveness and relevance of where the ATO chooses to invest its resources.

Description

On 10 and 11 February 2015 a ‘think camp’ was held to examine the way the ATO does business now and to develop insights and alternative perspectives on approaches to compliance.

Who we consulted

Institute of Chartered Accountants Australia, CPA Australia, Pitcher Partners, The Tax Institute, Corporate Tax Association, Institute of Certified Bookkeepers, Property Council of Australia, Australian Bankers' Association, Council of Small Business of Australia, Treasury, Attorney-General's Department, Australian Securities and Investment Commission, and Office of State Revenue Queensland.

Outcomes

Insights were generated that will inform the way the ATO plans its investment across Compliance in the 2015–16 year as well as laying a foundation for the future.

[201506] Tax professionals alert feedback

Purpose

To assess the new tax professionals alert product’s usefulness to tax professionals and whether there was also still a place for our existing SMS alert system.

Description

An idea discussed at a session held with members of the ATPAG and BASAAG in October 2014 was a new subscription-based email product to provide timely updates regarding urgent issues, like portal outages. The new product, Tax professionals, alert has been designed as a product that could either replace or work together with our current SMS alert service, and replace some of the messages we send out to tax professionals via our traditional email broadcast channel.

The new product was provided to members of the ATPAG and BASAAG for them to comment on generally and also for their response to specific questions.

Who we consulted

A targeted group of tax agent and BAS agent members (previously consulted with last year) of the ATO Tax Practitioner Advisory Group (ATPAG) and BAS Agents Association Group (BASAAG).

Outcomes

Feedback was sought on the Tax professionals alert product, designed as a result of previous research with tax professionals and consultation with ATPAG and BASAAG members.

We received overall support for the design and planned usage of the new product. They advised they still also want to receive the SMS alerts. We are working through the requirements to finalise the new product ready for use.

[201505] International Dealings Schedule (IDS) Review 2015

To consult relevant stakeholders as part of a post-implementation review of the IDS. Consultation will:

examine the impact of the IDS on both large, and small and medium entity taxpayers and their advisers

determine if compliance costs have reduced, including through more industry data and improved risk filters

seek information on possible future direction for the IDS to enhance its effectiveness while mitigating its compliance cost.

Description

Conduct face-to-face and possibly telephone interviews with stakeholders chosen to cover the main affected populations. These include:

ATO stakeholders to gain an understanding of its impact on risk management

stakeholders submitting the IDS to gain an understanding of the compliance costs in the past and how best to mitigate them going forward

all stakeholders to gain insights on how to develop the IDS.

Findings will be integrated with analysis of data on how the ATO understanding around international risk has changed since the introduction of the IDS.

Who we consulted

Large accounting firms, small and medium businesses, large corporates and industry associations.

Outcomes

The consultation phase is now complete and we are now combining the responses and findings about various perspectives of the IDS and commencing drafting the final report. We approached over 80 clients ranging from large accounting firms and major industry bodies, through to SME type clients limited to Australia/New Zealand operations. Of the 80 approached, 37 engaged with us to provide their feedback. A full analysis of the outcomes of the consultation and a full draft report will be forwarded for endorsement within the ATO with a view to being published at the end of 2015 or early 2016.

[201504] Future of the tax profession in the longer term

To better understand the trends and environmental factors impacting the tax profession, including software providers, professional associations, tax practitioners and the ATO.

Description

The group will explore the changing environment to identify some of the trends and key factors impacting the tax profession. to influence the future direction of the profession.

Who we consulted

Tax practitioners, The Tax Practitioners Board, software developers and the Australian Business Software Industry Association, Chartered Accountants Australia and New Zealand, CPA Australia, Institute of Public Accountants, National Tax and Accountants’ Association, The Tax Institute, The Institute of Certified Bookkeepers and H&R Block.

Outcomes

A specialist consultative group has been established to consider matters.

[201503] Supporting the tax profession during 2015–16

Purpose

To work together with key stakeholders across the tax profession to support tax professionals in a changing environment, especially with changes to their software and online services as we move towards a digital environment.

Description

The working group agreed to develop a roadmap, setting out key activities and milestones impacting practitioners from ATO, professional associations and software developers.

The roadmap would:

identify what we need to do to successfully support the tax profession over the next two years

inform the prioritisation of portal services being rebuilt in ATO online

to help practitioners understand how the environment is changing and when these changes will occur

the working group will also focus on developing an appropriate transition for the PLS and to support the development of new portals and the provision of agent services through practice software supplied by software developers.

Who we consulted

Tax practitioners, Tax Practitioners Board, software developers and the Australian Business Software Industry Association, Chartered Accountants Australia and New Zealand, CPA Australia, Institute of Public Accountants, National Tax and Accountants’ Association, The Tax Institute, The Institute of Certified Bookkeepers and H&R Block.

Outcomes

The ATO also met with the profession associations on 29 June 2016 to review the role of the working group and its name. It was agreed that the working group should expand its focus to cover practitioner technology which would ensure that there is a consistent approach to PLS and the related enhanced services to agent practice software as the ATO works to deliver enhanced services to agents in partnership with software developers.

It was also agreed that the working group would be renamed to the Practitioner Technology Working Group to reflect the change in focus.

The ATO worked closely with industry representatives to develop standard employee share schemes (ESS) documentation and safe harbour market value methodologies. As part of this process, consultation sessions with industry and interested parties were held in Brisbane, Sydney and Melbourne in April 2015. On 28 April 2015, a roundtable discussion was held in Sydney by the Minister for Small Business to consult on the ESS documentation with key representatives from industry, ATO, ASIC, and Treasury. Feedback received was used to revise the products.

In May 2015, the ATO conducted co-design sessions on the usability of products being developed for ESS. Co-design is a systematic approach to understanding users, as well as working with them to design, shape and test our solutions to deliver better experiences. Results gathered from those sessions were considered in development of the products.

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